Customer Relationship Management (CRM)
Four types of customer relationship management:
- Win back or save: process of convincing a customer to stay with you and the point they are discontinuing service or convincing them to rejoin once they have left.
- Prospecting: effort to win new, first-time customers.
- Cross-sell/Up-sell: increasing wallet share or the amount the customer spends
- Loyalty: trying to prevent customers from leaving and uses three essential elements:
- value-based segmentation
- needs-based segmentation
- predictive churn models
Steps in creating loyalty:
The courtship- the enterprise must get to know the customer. Loyalty is very weak because it is not based on relationships, but solely on look and feel- product and prices. The attitude is "what have you done for me lately."
The relationship- the enterprise engages with customer attitudes both before and after the purchase. It listens to the customer who is gradually getting to know the enterprise. Loyalty is no longer based on product and price alone.
The marriage- a long lasting relationship is mutually agreeable, and both parties become inextricably linked. Loyalty is based on a high degree of satisfaction and the customer will get personally involved with the enterprise. The feeling of customer satisfaction increases and with it loyalty to the enterprise. For this level of relationship to continue, both the customer and the enterprise must receive a positive benefit even though both parties will inevitably experience disappointments on the journey to their common goal.
Remember the 80/20 rule: 80% of your sales come from 20% of your products. 80% of your sales come from 20% of your customers. 80% of your profits come from 20% of your customers. 80% of your profits come from 20% of your products.
Customer Acquisition
Main focus is acquiring new customers. Actions are directed toward building a customer base. Heavy use of technology and training sales people on how to initiate contacts with potential customers. Spend a significant amount of time on benchmarking best practices, analyzing customer care processes and conducting initial customer research.
Customer Retention
Here the main focus is on keeping the customers an organization has and working to maximize the relationship. Organization begins to segment customers into groups with similar needs in order to serve each client group more effectively. These segments could include geographic location, types of products/ services sold size of company, etc.
Strategic Customer Care
Here organizations realize they cannot be all things to all people. In this stage an organization identifies those customers which hold the greatest probability for long term, high profitability business. It will continue to deliver a core level of service for all of its customers, but will develop a distinctive, high level of service for its best customers. For example, a parts company leased a building across the street from its largest customer so when that customer needed parts, it was able to place the order for those parts and within less than an hour those parts were delivered to that company. The volume of business was sufficiently large enough to support that kind of operation. In the strategic customer care stage, organizations have developed a high relationship with a customer. The customer has become dependent on the organization for the products/services it provides and the organization is also dependent on the organization for the level of business it provides.
Organizations operating in this stage also realize that not all customers are the same and not all customers deserve the same level of service. Customers become more valuable the longer they remain customers, and that satisfied customers lead to higher profits.
